Credo is supplying high-speed interconnect cables (priced at $500) that are critical infrastructure for connecting GPU clusters within AI data centers.

In July, Elon Musk posted photos from inside xAI's Colossus 2 data center in Memphis, Tennessee, featuring thousands of neatly organized purple cables connecting servers together. Those cables are the signature offering of Credo, a 17-year-old Silicon Valley-based semiconductor company whose name rarely gets mentioned alongside the leaders of the AI boom. Credo's shares have more than doubled this year to $143.61 after soaring 245% in 2024. The company's market cap, which was about $1.4 billion at its 2022 IPO, now sits at close to $25 billion. The stock jumped 5% on Friday after analysts at JPMorgan Chase initiated coverage with a buy rating and a $165 price target, identifying active electrical cables (AECs)—a market Credo pioneered—as positioned to hit $4 billion by 2028 as major hyperscalers invest in data center buildouts.

Credo's purple AECs, which cost between $300 and $500 each depending on bulk discounts, are sturdy copper cables wrapped in braided covering with chip-containing connectors on each side. They offer advantages over fiber optic cables by being more reliable and avoiding what Credo CEO Bill Brennan calls a "link flap," where one part of an AI cluster goes offline because an optical cable fails, "literally shut[ting] down an entire data center." The technology addresses a fundamental architectural shift: as Nvidia's latest GPU systems slot together to comprise 72 GPUs per system, with next year's fastest racks doubling that and the following year's Kyber racks reaching 572 GPUs, each GPU needs its own connection to the network switch. According to 650 Group analyst Alan Weckel, "In the past, Credo's opportunity was one cable per server, but now Credo's opportunity is nine cables per server." Credo holds an estimated 88% of the AEC market, competing with Astera Labs and Marvell.

Revenue in fiscal 2025, which ended in early May, more than doubled to $436.8 million, with the company turning profitable and recording net income of $52.2 million after losing $28.4 million the prior year. Analysts expect sales to more than double again in fiscal 2026 to almost $1 billion. JPMorgan Chase analysts predict annualized revenue growth for Credo of at least 50% through 2028, supported by "increasing deployments from major companies such as Amazon, Microsoft, and xAI as well as broadening adoption, including Meta and more." Credo is increasingly working with hyperscalers in early planning stages as designs become denser. Brennan told investors that "when you connect with these hyperscalers, the numbers are very large" and that Credo expects three or four customers to make up more than 10% of revenue each in coming quarters, including two new hyperscale customers this year.

While analysts have cited Amazon and Microsoft as customers, with AWS CEO Matt Garman recently posting an image showing Credo's purple cables on Amazon's Trainium AI chip racks, the company does not publicly name hyperscaler clients. Meta and xAI did not respond to requests for comment, though an example Nvidia GPU rack designed by Meta displayed at a data center conference in San Jose prominently featured Credo's cables. The broader market opportunity is substantial, with analysts expecting $1 trillion in spending on AI data centers by 2030. Brennan told investors that "every time you see a new announcement of a gigawatt data center, you can rest assured that we view that as an opportunity," though any pullback from major cloud providers or scaling back in OpenAI's plans could hurt suppliers including Credo.